Going Global? Ten Things HR Absolutely Must Do

1. Going Global? Ten Things HR Absolutely Must Do Lance Jensen Richards, GPHR, SPHR Senior Director and Global Practice Leader Human Resources Consulting Kelly Services, Inc.

2. Today… • What is Globalization? • What does Globalization mean for HR professionals? • What are the Ten Things Lance is so worried about?

3. Today… • What is Globalization? • What does Globalization mean for HR professionals? • What are the Ten Things Lance is so worried about?

4. Three things to remember… • Capitalism is painfully efficient, but great fun… • Globalization is bulletproof • Darwinism is very, very real

5. What Are CEOs Saying? • “Global competition has heightened the need for flexibility and speed” • CEOs “worry that they don’t have the right kind of people for new market conditions” • “Globalization is rewriting the rules” Source: The CEO Challenge; an annual survey of over 500 CEOs worldwide, executed by The Conference Board and various partners

6. What Are CEOs Saying? • In 2001, Competing for Talent was the No. 1 management challenge in Europe, No. 2 in the Americas. • By 2004, “Talented Managers/ Executives” was rated as a top priority by 86% of CEOs in Asia, 82% in Europe and 72% in the US. • By 2007, HR, Talent and Culture issues represented six of the Top Ten Challenges • Do you know why your CEO is lying awake at night? Why not??? Source: The CEO Challenge; an annual survey of over 500 CEOs worldwide, executed by The Conference Board and various partners

7. 2007: CEO’s Top 10 Global Challenges Percent ranking Challenge“Greatest Concerns” 1 Excellence in execution 38.3% 2 Sustained and steady top-line growth 36.8 3 Consistent execution of strategy by top management 31.8 4 Profit growth 28.4 5 Finding qualified managerial talent 27.2 6 Customer loyalty/retention 26.3 7 Speed, flexibility, adaptability to change 25.4 8 Corporate reputation 23.7 9 Stimulating innovation, creativity, enabling entrepreneurship 18.7 10 Speed to market 18.2 Source: The CEO Challenge; an annual survey of over 500 CEOs worldwide, executed by The Conference Board and various partners

8. 2007: CEO’s Top 10 Global Challenges Percent ranking Challenge“Greatest Concerns” 1 Excellence in execution 38.3% 2 Sustained and steady top-line growth 36.8 3 Consistent execution of strategy by top management 31.8 4 Profit growth 28.4 5 Finding qualified managerial talent 27.2 6 Customer loyalty/retention 26.3 7 Speed, flexibility, adaptability to change 25.4 8 Corporate reputation 23.7 9 Stimulating innovation, creativity, enabling entrepreneurship 18.7 10 Speed to market 18.2 Source: The CEO Challenge; an annual survey of over 500 CEOs worldwide, executed by The Conference Board and various partners

9. What Are CEOs Saying? • Of almost 1100 CEO’s surveyed globally, the Number Two threat to Growth is “Availability of Key Skills” at 72% • Only over-regulation was seen as a greater threat Source: Pricewaterhouse Coopers 10th Annual Global CEO Survey, 2006

10. Today… • What is Globalization? • What does Globalization mean for HR professionals? • What are the Ten Things Lance is so worried about?

11. Globalization means…relooking the HR Mission Statement • The right people • In the right place • At the right time • At the right cost • Doing things right • Doing the right things… • (BTW, don’t give me the “borders this” and “tax that” stuff)

12. Globalization means… offshoring people, not just jobs • i2 Technologies is offering to relocate their employees, regardless of nationality, to India. Why? • 66% decrease in hard costs • Development of Global Managers • Export of i2 corporate culture, leading to an i2 global culture. Labor mobility no longer means moving work overseas- it can mean moving workers overseas! Source: Travis Jacobsen, i2Technologies Director, Investor Relations

13. Globalization means… investing in your people • Infosys, the Indian IT giant finished 2007 with USD4.17bn in revenues • They are “investing a whopping USD450mm in training” … over 10% of gross revenues… and representing about 42% of eventual net profit… • How much are you spending? Source: The Economist, 6 Oct 2007; Infosys US GAAP Quarterly Financial Results for 3Q07: http://www.infosys.com

14. Globalization means… embracing turnover • The McPassport, a McDonald’s Europe initiative, is an official certification of the training and skills that employees have acquired while employed by McDonald’s • It is designed to support employee movement throughout the EU’s 25 member states • Over 225,000 McDonald’s employees are eligible for the McPassport

15. Globalization means… thinking outside the box • Matt Martin manages a Bar in Upper East Side Manhattan… the owner loves darts. • Matt also coaches the Dart Team for the Bar, which competes in a variety of dart leagues and dart tournaments • When coaching his team, Matt identifies top competing dart throwers, with an eye to recruiting them to work at his bar, and throw darts for his team. • Matt is looking at F1 and H1B visa transfer issues • Matt is considering a recruiting trip to the UK

16. Globalization means…thinking ahead, and thinking BIG In 1992, (16 years ago!) Ross Perot warned US voters about the dangers that would accompany the passage of NAFTA: the movement of jobs out of the US and into Mexico. Perhaps he should have also warned Mexico about China and WTO…

17. iPhone – 223,000,000 hits Star Wars – 126,000,000 hits Britney Spears – 107,000,000 hits Paris Hilton – 78,400,000 hits George W. Bush – 56,100,000 hits James Bond – 39,300,000 hits Shrek – 33,300,000 hits Johnny Depp – 20,600,000 hits India AND Labor/Labour – 4,800,000 hits Hu Jintao – 3,640,000 hits Felipe Calderón – 3,570,000 hits Vicente Fox – 3,070,000 hits Kim Jong Il – 2,650,000 hits Jose Manuel Barroso – 1,210,000 hits SHRM – 1,080,000 hits China AND WTO – 430,000 hits Lance J. Richards - 161 hits Globalization means…understanding perceptions Source: google.com, updated 23 June 2008

18. Globalization means…understanding perceptions In 2006, Johnny Depp earned over USD92.0 million. That equaled, based on per capita GDP: • One year’s work of 2,333 Americans or • One year’s work of 14,263 Mexicans or • One year’s work of 143,750 Indians or • One year’s work of 836,363 Ethiopians or • 25,555 years, if you’re the President of China Source: Forbes, The Economist, CIA Factbook

19. Globalization means…language issues to manage • There are 15,314,000 total students enrolled at US colleges and universities • In China, English language training is now compulsory for the 24.3 million students in their colleges and universities, and for the 62.5 million students in their junior and high schools. (Yes, that’s 86 million people! Nie Xuo Putonghua ma?) Source: US Census Bureau: Enrollment Status of the Population, and the People’s Republic of China National Bureau of Statistics: Statistical Communique of the PRC on the 2000 National Economic and Social Development

20. The means of production, in the form of computers, are now in the hands of the workers… literally. $178 laptops, on Linux platforms, are shipping to emerging markets… What will the “means of production” mean in 2030? How will unforeseen technologies change work? The Millennials andKarl Marx’ Revenge?

21. “Siemens has provided about 3,000 ‘discovery boxes’ filled with science experiments for three to six-year-olds to kindergartens throughout Germany, at a cost to the company of €500 a box… as well as providing similar boxes around the world to pre-schools from China to Ireland”

22. Even Change is Changing… • No more hockey sticks or pretty bell curves • Now we’re seeing discontinuous change; change that, well, changes! • We can no longer even forecast or vision for it: ZapMail, Enron, 11 Sept, MCI/WorldCom, Housewives on iPods, Skype video • Globalization is hammering the unaware and the unprepared

23. So, What is Global HR? Global HR is far more than managing expatriates; it’s about: • Managing and leveraging the differences and similarities in the diversity of national and business cultures • Attracting, retaining, and cultivating global human capital • Driving Global HR strategies that are tightly aligned interwoven with business strategies • Ensuring strategies for movement and utilization of people and work are in place

24. HR: Alignment or Interwovenness? • Railroad tracks are perfectly aligned, yet never intersect • A rope or cable is tightly and intentionally interwoven; a failure of even one strand weakens the whole

25. Today… • What is Globalization? • What does Globalization mean for HR professionals? • What are the Ten Things Lance is so worried about?

26. So, what are the Ten ThingsHR absolutely must do? • Include people and HR issues in your MA&A due diligence • Avoid pushing an HQ-centric agenda • Understand local labor issues • Learn about cultural and historical issues • Use robust compensation and benefit practices • Recruit the right people • Establish, measure and report relevant local HR metrics • Teach the folks back home about the new countries • Establish networks and learn from others • Create a locally-relevant, retaining work environment

27. 1. Include HR Issues in your MA&A and Greenfield Due Diligence • To be successful, your HR team must be fully engaged. They must have good relationships with your business development folks… • Inbound or outbound? Machts nicht… HR will have responsibilities • Whether the project is in Bergen op Zoom or Bandar Seri Bagawan, don’t let BizDev chase it unless HR is actively involved…

28. 1. Include HR Issues in your MA&A and GF Due Diligence • HR has a mandate to set, and manage, expectations at all levels: Corporate, Business Development, Country Managers. • Remember, once things are in motion, HR will be held accountable for the people issues • HR must read and understand the business plan and the economic model underlying it. • Does HR and the management team know what HR must deliver?

29. 2. Avoid pushing an HQ-centric agenda • Driving for HQ-style results may irritate your locals at best, and demotivate them at worst • Home country work practices may not always be exportable values… What does Quality look like in the target country? • Ask: How have we changed our corporate expectations to reflect the culture, realities and learnings from this new country?

30. 3. Understand LocalLabor Issues • You must understand the current marketplace; the availability of managers; recruitment hot buttons; specific technologies which are scarce or abundant • You must understand legal constraints on your ability to hire, manage, pay and separate employees • You absolutely must understand local practices; in Japan or Sweden, you could be hiring for life…

31. 4. Learn about Cultural and Historical Issues • Where are you going? Why? • Do you understand the cultural and business drivers for this location? • Do you understand the historical issues which got them there? • What pre-conceived notions about your industry, your firm or your headquarters country must you overcome?

32. 4. Business Culture Issues… • To what extent is your business dependent on speed of execution? How does that play in the local culture? • To what extent does your business model depend on specific ROI within a specific timeframe? Will the local culture have an impact on this?

33. 4. Business Culture Issues… • Do you fully understand the political climate? Have you planned for wild contingencies? • In PwC research, “cultural issues/ conflicts” was ranked as the top area of concern for CEOs, globally, in North America, in Asia/Pacific, in Emerging Economies, and in firms with over USD10bn in revenues

34. 5. Use Robust Compensation Practices • Have you studied local practices? How about regulatory requirements? • Has HR obtained reliable market data? Is it available? If not, what is the touch-point for your compensation decisions? • Can you implement a pay for performance culture? Is it appropriate? • Can you develop/implement linkages between pay and performance? Culturally, is that possible?

35. 5. Use Robust Benefits Practices • There are two types of benefits; Statutory and Market Practice • You will have to exceed Market Practice if your requirements are at odds with current employment market • What are you doing? What are your competitors doing? Why? • Have you done your homework?

36. 6. Recruit the Right People • Lack of knowledge of local labor markets and recruitment practices could be a derailment factor • Have you researched the availability of qualified managers? How do you adjust your Talent Acquisition strategies overseas? • Can you interview effectively? • Do you understand differences and expectations about pay; constraints on and attitudes toward mobility?

37. 7. Establish and report relevant local HR metrics • MTTF and CPH are toast. The only thing that matters is quality. (If your company values MTTF and CPH over all else, run!) • Can you measure how HR contributes to your business? Do you have relevant, local comparators? • Can you show that HR is doing the right things- and not just doing things right? • Can you demonstrate the value HR brings to offset HR costs? • Are you communicating what HR accomplishes?

38. 8. Teach the folks back home… • Ensure that there is executive visibility to challenges/issues • Does everyone- everyone- understand about the new countries? • Who is going on field visits? What are they saying when they get back? Why? • What are you, personally, doing to educate corporate officers about the operation?

39. 9. Establish networks and learn from others • The name of the game is information. The more you know, the better off you are… • Network with other multinationals; join the AmCham wherever you are. If on a Due Diligence trip, stop by the AmCham. • Identify if there is a local HR group, especially amongst American employers. If there’s not one, start a monthly HR breakfast with other HR folks in your city. • ASK! Whatever it is, you’re probably not the first person to encounter it. Post queries on the SHRM Global Forum board.

40. 10. Create a locally-relevant, retaining work environment • You must develop a retaining work environment- and this has to be defined in local terms. • What’s “retaining” in Toledo may actually be a turn-off in Tashkent or Tianjin… • Just because education assistance is a hot-button in Barcelona doesn’t mean that your people in Beijing want that instead of housing subsidies!! • How do you know whether you’re pushing the right buttons? • Tailor retention efforts to individual employee needs

41. 10. Create a locally-relevant, retaining work environment • Focus on your top people, and be willing to pull out all the stops • Create a positive environment which gives employees flexibility • Integrate career development efforts with business goals

42. Winners in Global HR are Demonstrating… • Speed in their planning and delivery • Savvy in dealing with the world, their industry, their enterprise, and their people • Solutions that are global, transparent, nimble and effective • Simplicity in everything they do • Scope in understanding their enterprise outside their home country Where are you?

43. Pertanyaan? Vragen? ερωτήσεις? 问题? Domande? Soalan? 質問? Kérdések? Sorularınız? Questionne? Spørsmål? ¿Preguntas? أسئلة ؟ คำถาม ? ВОПРОСЫ? Otázky? Fragen? Pytania?